The National Board of Revenue has recommended that the finance ministry should consider imposition of three per cent special tax (cess) on income tax for spending in education sector in the upcoming budget for next fiscal year in line with the recently announced budget of India.
The revenue board also recommended for increasing the tax-free limit of individual income and making mandatory transaction for buying and selling assets through banking channel, said finance ministry officials.
Along with the report, NBR chairman Md Nojibur Rahman also sent an unofficial letter to the minister seeking his instructions on these issues, said a high official of the finance ministry.
The NBR report said that Indian taxpayers, both individual and corporate, had to pay education cess, one kind of tax payable in addition to income tax, at the rate of 3 per cent of income tax.
Education cess is used to improve the quality of secondary and higher secondary education in India.
Indian taxpayers also pay surcharge ranging from 5 per cent to 10 per cent for other purposes, said the NBR letter.
The revenue board reviewed the Indian Finance Bill-2015 and identified measures related to income tax, value-added tax and customs duty which it considered similar and related to the development policies and strategies of Bangladesh.
In the Indian budget for the next fiscal year, which will begin on April 1, the tax-free income ceiling for general taxpayers has been proposed to increase to Rs 2.50 lakh from the existing Rs 2 lakh.
Currently, the highest individual tax rate is 30 per cent in India while corporate tax rate is 30 per cent for local companies and 40 per cent for foreign companies.
The limit of tax free income in Bangladesh is Tk 2.20 lakh while business bodies have been requesting the government to increase the limit for the last few years.
The NBR report also mentioned that India made it mandatory transactions for buying and selling assets through banking channel to stop expansion of undisclosed money.
The Indian government emphasised on some issues including infrastructural development, expansion and protection of the existing industries, increase of investment in industrial sector, increase in national productivity, agricultural development, poverty alleviation, environmental protection, ensuring GDP at higher rate and simplification of tax payment while preparing budget proposals regarding customs duties, according to NBR analysis.
Bangladesh may also follow the same strategies in preparing customs-related proposals in the next budget to provide incentives to attract investment, ensure trade liberalisation and environment protection, it said.
Simplification of VAT system, expansion of VAT net, curtail of discretionary power of VAT officials and reduction of the sectors for allowing VAT exemption may get priority in the next budget, the report said.
In the budget proposals, the Indian government has taken several initiatives including time-bound online registration for central excise and service tax and approval of digitised invoice to ensure trade facilitation.
It also proposed to increase excise duty on cigarette and polymer products.
Taxes on entertainment parks, theme parks and concert services were also proposed to be increased.
-New Age